House prices unchanged, but S&P predicts growth to persist
07-29-2014
Latest house price data for England and Wales suggest some sanity has been restored to a rapidly rising market, with prices static between May and June, reports FTAdviser sister title FastFT.
The Land Registry’s June report says there was no monthly change, although the annual growth in June stands at 6.4 per cent. That puts the average house price for England and Wales at £172,011.
In London, there was a monthly increase of 0.1 per cent and, at 16.4 per cent, the annual change for London is “considerably higher than other regions”. The average price of property in the capital is £437,608, topped by average home prices of £1.3m in Kensington and Chelsea.
Click here to see the Land Registry chart showing annual price growth by property type, and click here to see the chart showing price changes by region.
Elsewhere, FastFT reports Standard & Poor’s has predicted that the UK’s red-hot housing market will cool somewhat in the coming years, but still leave the rest of Europe trailing – especially France.
The US rating agency expects UK house price growth to slow from the current 9.7 per cent annualised figure to 7 per cent overall this year, and decline to 4.5 per cent next year and 3 per cent in 2016, as the Bank of England raises interest rates to more normal levels.
However, those growth rates are still much higher than any other major western European country over the next two years, and S&P does not expect any significant downturn in UK housing.
S&P predicts: “We do not believe the UK market is about to experience a new correction. A number of factors will continue to underpin market activity.
“First, the economy as a whole will remain strong, although the rates of growth experienced in recent quarters may not be replicated… Second, the imbalance between supply and demand has worsened since the beginning of the crisis.”
Even in a scenario where interest rates rise by 1 per cent, UK housing market prices would only fall by 1 per cent over a year, S&P reckons.
The rating agency also argued that concerns over Germany’s rising property prices are overstated, with gains underpinned by the strong economic fundamentals, low interest rates, conservative mortgage financing and fairly affordable prices.
However, S&P took a dimmer view of the French housing market, where it expects prices to decline 4 per cent this year due to the weak economy and rising unemployment. In fact, it said that given the “disheartening backdrop” it was “puzzling” that prices hadn’t fallen further already.